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So the reason crypto is valuable is that it allows people to take part in complex crypto transactions.

vineyardmike 5y ago
> So the reason crypto is valuable is that it allows people to take part in complex crypto transactions. So the reason crypto is valuable is that it allows people to take part in complex financial transactions. Fixed it for you :)
- gitfan86 5y ago
  Using crypto though. No one is trading real estate on DeFi. they are trading crypto. Obviously some people are converting the crypto back into cash and buying real estate with their gains, but those gains come from the losses of other people eventually. Crypto has no cash flow.
  - vineyardmike 5y ago
    Imagine a regular, government-approved bank that only stores (government insured) deposits. If its only "job" is to store money, and it obviously can't operate for free, people have to pay for the right to store their money there. Weird bank, but easy to understand. People pay monthly fees for storage boxes and could theoretically store cash in it, for example - obviously no interest growth in box-money. In Europe they have had negative interest rates at times, which is essentially the same thing to a bank that costs money - in that regulatory environment, people pay for that government backed security of their money. Just because a bank uses EUR and not USD does not mean its bad, or invalid, or whatever. In crypto, it is a similar thing, but obviously without government insurance. To secure the ledger, you pay for it. It is paid by the holders and given to miners to secure the ledger (via deflation and tx costs). Its a similar idea. People find this distributed blockchain security to have value, so they pay for it. This should so far be easy to see parallels. People find value in the security, there is just a different provider and regulatory environment, but in both cases people pay for that security. You may not value one kind or the other, but do accept that some people somewhere values each of them. With this framing of the value provided by the blockchain, don't think of cryptocurrency like a typical stock market type trading. You can think of it more like currency. We legally treat it like a security (in US), but understand its value-proposition is more currency-like. --- --- ---- --- --- --- > Obviously some people are converting the crypto back into cash and buying real estate with their gains Yes people usually convert it back to fiat money to buy things like real estate. Not always, but usually. Nothing is absolute. Think of this like a European person taking euros to America. Most of the time, they'll change it to USD before buying things, but maybe they find a person in America who wants EUR because they're selling their American home to move to Paris. The EUR economy in America is small, and so is the BTC. > those gains come from the losses of other people eventually. Crypto has no cash flow. When you trade stocks, people buy/sell the security, and in theory the act of the business conducting itself (profits, etc) should impact the value, eg by generating a dividend or increasing share value. Therefore, overtime the market becomes worth "more" because more economic activity is represented by the shares. Therefore it is not a 0 sum game. In a rising market, the market increases in value (positive sum). This is not crypto. That is true, but this doesn't mean it should all be thrown out. Crypto gains are generated at the expense of others. That is also how FOREX trading works, and people do that and its not controversial to most anti-crypto people. Speculative investing is not something I'll push for or attack, but people seem to want to do it, but it is not a good or only reason d'être for crypto in my opinion. These financial transactions can sometimes be improved with more complex financial engineering. At times, is way more accessible with crypto than traditional financial institutions. International transfers are another crypto use that is common. There is no inherent reason that a blockchain has to be used to perform this, but somehow in this world it came to be that crypto is one of the cheapest ways to move money overseas. --- --- ---- --- --- --- TLDR: Crypto has a different value proposition than you think it should, and yes, it has value to people. Also speculative trading is not everything.
    - gitfan86 5y ago
      Yes, avoiding banks for international wire transfer and avoiding a banks for storing money are use cases that some people use crypto for. But these are not world changing to my original point, you could have done that with physical moving money or putting it under your bed.
      - vineyardmike 5y ago
        There is no world changing feature needed to make it a valid and useful system. even you could agree that while you could ship cash across the ocean, crypto is way easier and frankly more secure. Existing solutions never stop people from inventing new ones. Again, plenty of DeFi applications are way more accessible than fiat counterparts and that’s a unique feature that probably can’t exist elsewhere - better availability of certain types loans for trading, ability to earn income from providing liquidity to exchanges, decentralized exchanges without third parties. Not all defi is particularly useful or better than fiat counterparts, eg a crypto mortgage will not likely exist anytime soon.
        gitfan86 5y ago
        Sounds like we are on the same page. You could build a trading platform on top of a NoSQL database instead of a distributed database. If people used that platform and found value in it, it would be valid. I don't know if you read the article but the last paragraph is what inspired my original comment. FTA in quotes below. "If crypto and DeFi are truly that great for innovation now, isn't it kind of ironic that after nine months of work, I'm starting to realize that my project's challenges don't lie within technology but are made of legal uncertainty?" Unfortunately people are getting the idea that crypto technology is revolutionary and jumping in with unrealistic expectations.
      - alexatalktome 5y ago
        Dude, are you trying to miss the point to score internet argument wins? This man is writing large, thoughtful explanation -complete with concessions and limits- that is not hyped and not biased and you’re latching on to minor details and using that as a reason to poo-poo the logic? You’re petty arguing against a calm factual explanation. They’re not even good arguments. “You could have done that by putting it under your bed” is so silly and intellectually dishonest. Try to imagine the other side here, and at least consider the possibility that there is room for additional value beyond your world view. At least try to see the other side even if you won’t want to see from the other side.

> So the reason crypto is valuable is that it allows people to take part in complex crypto transactions. So the reason crypto is valuable is that it allows people to take part in complex financial transactions. Fixed it for you :)

gitfan86 5y ago
Using crypto though. No one is trading real estate on DeFi. they are trading crypto. Obviously some people are converting the crypto back into cash and buying real estate with their gains, but those gains come from the losses of other people eventually. Crypto has no cash flow.
- vineyardmike 5y ago
  Imagine a regular, government-approved bank that only stores (government insured) deposits. If its only "job" is to store money, and it obviously can't operate for free, people have to pay for the right to store their money there. Weird bank, but easy to understand. People pay monthly fees for storage boxes and could theoretically store cash in it, for example - obviously no interest growth in box-money. In Europe they have had negative interest rates at times, which is essentially the same thing to a bank that costs money - in that regulatory environment, people pay for that government backed security of their money. Just because a bank uses EUR and not USD does not mean its bad, or invalid, or whatever. In crypto, it is a similar thing, but obviously without government insurance. To secure the ledger, you pay for it. It is paid by the holders and given to miners to secure the ledger (via deflation and tx costs). Its a similar idea. People find this distributed blockchain security to have value, so they pay for it. This should so far be easy to see parallels. People find value in the security, there is just a different provider and regulatory environment, but in both cases people pay for that security. You may not value one kind or the other, but do accept that some people somewhere values each of them. With this framing of the value provided by the blockchain, don't think of cryptocurrency like a typical stock market type trading. You can think of it more like currency. We legally treat it like a security (in US), but understand its value-proposition is more currency-like. --- --- ---- --- --- --- > Obviously some people are converting the crypto back into cash and buying real estate with their gains Yes people usually convert it back to fiat money to buy things like real estate. Not always, but usually. Nothing is absolute. Think of this like a European person taking euros to America. Most of the time, they'll change it to USD before buying things, but maybe they find a person in America who wants EUR because they're selling their American home to move to Paris. The EUR economy in America is small, and so is the BTC. > those gains come from the losses of other people eventually. Crypto has no cash flow. When you trade stocks, people buy/sell the security, and in theory the act of the business conducting itself (profits, etc) should impact the value, eg by generating a dividend or increasing share value. Therefore, overtime the market becomes worth "more" because more economic activity is represented by the shares. Therefore it is not a 0 sum game. In a rising market, the market increases in value (positive sum). This is not crypto. That is true, but this doesn't mean it should all be thrown out. Crypto gains are generated at the expense of others. That is also how FOREX trading works, and people do that and its not controversial to most anti-crypto people. Speculative investing is not something I'll push for or attack, but people seem to want to do it, but it is not a good or only reason d'être for crypto in my opinion. These financial transactions can sometimes be improved with more complex financial engineering. At times, is way more accessible with crypto than traditional financial institutions. International transfers are another crypto use that is common. There is no inherent reason that a blockchain has to be used to perform this, but somehow in this world it came to be that crypto is one of the cheapest ways to move money overseas. --- --- ---- --- --- --- TLDR: Crypto has a different value proposition than you think it should, and yes, it has value to people. Also speculative trading is not everything.
  - gitfan86 5y ago
    Yes, avoiding banks for international wire transfer and avoiding a banks for storing money are use cases that some people use crypto for. But these are not world changing to my original point, you could have done that with physical moving money or putting it under your bed.
    - vineyardmike 5y ago
      There is no world changing feature needed to make it a valid and useful system. even you could agree that while you could ship cash across the ocean, crypto is way easier and frankly more secure. Existing solutions never stop people from inventing new ones. Again, plenty of DeFi applications are way more accessible than fiat counterparts and that’s a unique feature that probably can’t exist elsewhere - better availability of certain types loans for trading, ability to earn income from providing liquidity to exchanges, decentralized exchanges without third parties. Not all defi is particularly useful or better than fiat counterparts, eg a crypto mortgage will not likely exist anytime soon.
      - gitfan86 5y ago
        Sounds like we are on the same page. You could build a trading platform on top of a NoSQL database instead of a distributed database. If people used that platform and found value in it, it would be valid. I don't know if you read the article but the last paragraph is what inspired my original comment. FTA in quotes below. "If crypto and DeFi are truly that great for innovation now, isn't it kind of ironic that after nine months of work, I'm starting to realize that my project's challenges don't lie within technology but are made of legal uncertainty?" Unfortunately people are getting the idea that crypto technology is revolutionary and jumping in with unrealistic expectations.
    - alexatalktome 5y ago
      Dude, are you trying to miss the point to score internet argument wins? This man is writing large, thoughtful explanation -complete with concessions and limits- that is not hyped and not biased and you’re latching on to minor details and using that as a reason to poo-poo the logic? You’re petty arguing against a calm factual explanation. They’re not even good arguments. “You could have done that by putting it under your bed” is so silly and intellectually dishonest. Try to imagine the other side here, and at least consider the possibility that there is room for additional value beyond your world view. At least try to see the other side even if you won’t want to see from the other side.